Correlation Between Second Sight and Valhi

Can any of the company-specific risk be diversified away by investing in both Second Sight and Valhi at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Second Sight and Valhi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Second Sight Medical and Valhi Inc, you can compare the effects of market volatilities on Second Sight and Valhi and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Second Sight with a short position of Valhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Second Sight and Valhi.

Diversification Opportunities for Second Sight and Valhi

-0.41

Correlation Coefficient

Second Sight  Valhi

Very good diversification

The 3 months correlation between Second and Valhi is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Second Sight Medical and Valhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valhi Inc and Second Sight is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Second Sight Medical are associated (or correlated) with Valhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valhi Inc has no effect on the direction of Second Sight i.e., Second Sight and Valhi go up and down completely randomly.

Pair Corralation between Second Sight and Valhi

If you would invest  414.00  in Second Sight Medical on January 30, 2024 and sell it today you would earn a total of  0.00  from holding Second Sight Medical or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Second Sight Medical  vs.  Valhi Inc

Second Sight Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Second Sight Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Second Sight is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Valhi Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valhi Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Valhi may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Second Sight and Valhi

The main advantage of trading using opposite Second Sight and Valhi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Second Sight position performs unexpectedly, Valhi can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Valhi will offset losses from the drop in Valhi's long position.

The idea behind Second Sight Medical and Valhi Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.